Axon's Q4 Earnings Top Estimates, Connected Devices' Sales Increase Y/Y

Axon Enterprise, Inc. AXON reported fourth-quarter 2025 adjusted earnings of $2.15 per share, which beat the Zacks Consensus Estimate of $1.67. The bottom line increased 3.4% year over year.

Total revenues of $797 million surpassed the consensus estimate of $753.7 million and increased 39% year over year. The top line benefited from strong demand for TASER 10, Axon Body 4 and counter-drone equipment. Growing adoption of premium software solutions also augmented the top-line results.

In 2025, AXON reported net revenues of $2.78 billion, which increased 33.5% year over year. The company’s adjusted earnings were $6.85 per share, up 15.3% on a year-over-year basis.

AXON’s Q4 Business Segment Performance

Effective first-quarter 2025, AXON realigned its business segments. The company now reports results under two business segments, namely Connected Devices and Software & Services.

Connected Devices: The segment’s revenues jumped 37.6% year over year to $454.2 million, driven by an increase in demand for TASER 10 devices, Axon Body 4, counter-drone products and fleet systems. However, the adjusted gross margin decreased year over year to 49.3% from 52.2%. The Zacks Consensus Estimate for Connected Devices’ revenues was pegged at $417 million.

Software & Services: The segment’s revenues rose 39.8% year over year to $342.5 million. The uptick was driven by an increase in the aggregate number of users and growing adoption of premium software offerings. However, the adjusted gross margin decreased to 76.7% from 78% in the year-ago period. The Zacks Consensus Estimate for Software & Services’ revenues was pegged at $336 million.

AXON’s Margin Profile

Axon’s cost of sales increased 46.3% year over year to $335.4 million. Selling, general and administrative expenses increased 39.8% year over year to $317.4 million.

Total operating expenses climbed 41.1% year over year to $511.4 million. The adjusted gross margin decreased to 61.1% from 63.2% in the year-ago period, owing to global tariff-related impacts and a higher Platform Solutions product mix in Connected Devices.

AXON’s Balance Sheet & Cash Flow

At the end of fourth-quarter 2025, Axon had cash and cash equivalents of $1.20 billion compared with $454.8 million at December 2024-end. Long-term lease liabilities totaled $98.9 million compared with $41.4 million at 2024-end.

In 2025, the company generated net cash of $211.3 million from operating activities compared with $408.3 million in the previous year period.

Adjusted free cash flow was $85.6 million in 2025 compared with $344.3 million in the prior-year period.

Outlook for 2026

For 2026, Axon expects revenues to grow 27-30% year over year. Adjusted EBITDA margin is expected to be 25.5%.

The company expects capital expenditures to be between $185 million and $215 million. This includes investments in long-term research & development projects, continued capacity expansion, global facility build-outs and new product development. It anticipates stock-based compensation expenses to be $230 million.

AXON’s Outlook for 2028

In 2028, Axon anticipates achieving revenues of $6 billion annually. Adjusted EBITDA margin is projected to be about 28%. The company aims to generate strong cash flow, with adjusted free cash flow equal to 60% of adjusted EBITDA. It plans to limit annual dilution from stock-based compensation to less than 2.5%.

AXON’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Graco Inc. GGG posted quarterly earnings of 77 cents per share in the fourth quarter of 2025, in line with the Zacks Consensus Estimate. This compares with earnings of $0.64 per share a year ago.

Graco posted revenues of $593.2 million for the quarter, surpassing the Zacks Consensus Estimate by 1.39%. This compares with year-ago revenues of $548.67 million.

Baker Hughes Company BKR reported fourth-quarter 2025 adjusted earnings of 78 cents per share, which beat the Zacks Consensus Estimate of 67 cents. The bottom line also increased from the year-ago level of 70 cents.

Total quarterly revenues of $7,386 million beat the Zacks Consensus Estimate of $7,056 million. The top line also increased from the year-ago quarter’s $7,364 million.

3M Company MMM delivered adjusted earnings of $1.83 per share in the fourth quarter of 2025, which surpassed the Zacks Consensus Estimate of $1.82. The company reported earnings of $1.68 per share in the year-ago quarter.

MMM’s adjusted revenues of $6.00 billion missed the consensus estimate of $6.08 billion. On an adjusted basis, organic revenues increased 2.2% year over year.

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